This morning, IRCE 2018 kicked off in Chicago with a keynote from one of Warby Parker’s co-founders, David Gilboa. While the conference may be called Internet Retailer Conference and Exhibit, Gilboa’s keynote focused on both online and offline solutions implemented by the company during its eight-year history.
Warby Parker’s co-founders met as graduate students and built their business on the belief that eyewear could be effectively sold online at a price less than an iPhone. At the time Warby Parker was established, fewer than 1% of eyeglasses were sold online. To Gilboa and his partners, it was clear that there is a massive concentration of power in the eyewear industry. Most consumers don’t realize that all of these brands are owned or exclusively controlled by one company: Luxottica. This Italian-based company created the illusion of choice while marking up its products 10 to 20 times what they cost to manufacture. As a result, Gilboa felt it was the right time to launch a vertically integrated brand. The solution was simple: They sold eyeglasses exclusively through their site at $95 and developed a process for customers to try on up to five pairs at no cost before committing to a purchase.
Gilboa and his team had bootstrapped their business. Money went to three things: inventory, a developer to build the website, and a fashion publicist to spread the word. Features in GQ and Vogue quickly hit newsstands before their site was live. One day at 4 am, the site went live, and Warby Parker received its first order while Gilboa was in a 10 am class in graduate school. By the end of that same class, there were more orders than there was inventory, so developers quickly implemented a waitlist functionality. Then, they started getting calls from people asking if they could visit their store or office with their answer being, “Well our store is our apartment, but sure!”
Eventually, the team opened up Warby Parker’s first store. They had no POS and used the ecommerce site for checkout. They quickly realized that the output from the face-to-face conversations was more important than those in-person sales. When Gilboa and his fellow co-founders graduated from business school, they turned part of their sixth-floor office into a customer showroom. Even with no storefront signage, showroom generated millions in revenue and brought in hundreds of customers each day; so many that they were almost evicted.
Soon after that, they opened their first pop up shop in a garage in Soho, where they sold Christmas trees and eyeglasses. Next, they gutted a school bus and drove around the country opening pop-up shops, essentially testing to see which cities were going to be most receptive to a Warby Parker store location. At the end of the cross-country trek, they decided Georgetown in Washington, D.C. would be the best spot for a new store. It was the first place they looked for a location, and it’s now one of their best performing stores in the U.S. The success of the pop-ups gave them the confidence that physical retail is not dead, so they took the plunge, signed a lease, and started building a permanent store in Soho.
Since starting Warby Parker, Gilboa has come to believe that terms like “internet retail” and “ecommerce” will become obsolete, as customers don’t think in terms of channels but brands. Today, Warby Parker has 75 stores and plans to have 90 stores by the end of the year.
Regardless of where they shop, Warby Parker customers value convenience. In response, Gilboa and his team invested in technology to make online and offline as convenient as possible. They developed their own point of sale system; it’s one unified system that marries customer data from online and offline interactions.
On top of their POS, the team continuously builds applications to meet customer needs. For example, shoppers were walking into the store crumpled pieces of paper that had a list of frames they want to try. As a result, developers built an online favorites tool to track which glasses customers wanted. By the time the customer arrives at the store, the sales associates have the pairs ready for them to try.
Gilboa and his team also built solutions for the in-store shoppers who wanted to purchase at a later time. Many store visitors come in not knowing their insurance information, or they want a spouse’s opinion before making a transaction. Initially, sales associates wrote wishlists down on bookmarks for the customer to take home, but eventually Warby Parker created a digital version. “Advisors” in the store take photos of the customer wearing the glasses and auto-generates an email with a one-click add to cart. Today, 60% of those emails result in a transaction. Gilboa credits part of the success to the comfortable conversation that can happen when a sales associate is not pressured to close in the store.
The goal of these solutions is superior customer service. Warby Parker’s NPS is 86, beating Costco and many other well-loved brands. More importantly, it’s easily triple the score of their competitors. As Gilboa pointed out, “Customers are our best marketing channel.”
Gilboa asked, “How can we use tech to gain more scale and offer both online and offline experiences?” They were one of the first brands to use Apple’s TrueDepth camera. With an iPhone X, you can use the “find your fit” feature that projects 30,000 points onto the surface of your face to map its curvature and calculate frame recommendations based on your unique facial structure.
Getting a new eye prescription usually requires a trip to the optometrist, so Gilboa and his team asked, “What if we designed a digital solution?” The tech team patented an at-home eye exam technology where customers pair their phone with any digital screen using Warby Parker’s app, “Prescription Check.” The app determines how far the customer is from the screen and tells them to move a precise distance for the test. Customers can then use their phone as a remote control and send results to their optometrist to write a remote subscription.
In general, Gilboa and the team at Warby Parker continue to focus on where there is friction. Being vertically integrated, they leverage their direct line to happy but vocal customers to gather data and incrementally solve customer problems.